Telecom cops $500K fine for uncapped plan

Telecom’s first attempt at an unlimited data offer is likely to go down as one of the most disastrous plans in NZ telco history - one that has seen the incumbent pay, and pay, for its mistake.

Today the Auckland District Court fined Telecom $500,000 after the company pleaded guilty to 17 charges of breaching the Fair Trading Act with its Go Large plan, following a case brought by the Commerce Commission. It has also been ordered to pay a further $44,000 in reparation to customers

Launched in October 2006, Go Large offered customers an unlimited data cap plan. Its advertising hailed the plan as enabling speeds “as fast at the user’s line will allow”. In tiny letters at the end of the advertising it was written that a fair-use policy would apply – that is, those who downloaded too much would get their speeds capped. But someone in Telecom got it wrong and reduced the speeds of ALL customers on the Go Large plan. After weeks of complaints, the telco confessed to its mistake in February 2007, stopped the plan and paid the 97,000 affected customers $8.4 million in compensation.

The Go Large fiasco capped an annus horribilis for Telecom, which began with the infamous speech by its then CEO Theresa Gattung in which she told analysts in Sydney that telcos used “confusion as a marketing tool” and said that the government would never be so dumb as to unbundle the local loop. Since that time the telecommunications industry has been transformed by LLU, the company has undergone operational separation and there is a new CEO, Paul Reynolds, at the helm.

This year, Telecom made another attempt at the launching an unlimited plan, called Big Time, but it was careful to make it clear upfront that traffic shaping would occur during times of peak internet usage.